AFVs drive used car price growth
The average price of used cars rose moderately last month, from £12,763 in June to £13,115. Growth is slowing among petrol and diesel vehicles but rising sharply for alternative fuel vehicles.
This is according to the Auto Trader Retail Price Index, which also found the rate of price growth is slowing, recording a decline of 0.7% in July; the first time negative growth has been seen since August 2016.
A closer inspection of the data reveals that the easing is down to newer cars (those aged under five years) and internal combustion engines (ICE).
Whilst prices of ICE vehicles remain buoyant, the rate of growth for both petrol and diesel cars are in decline. In fact, despite a sticker price of £11,579 in July, at 0.6% petrol has recorded its lowest rate of price growth since May 2012. And with an average retail price of £14,394, and 1.3% decline in the rate of growth, used diesels are not faring much better.
However, it’s a more positive story for alternatively fuelled vehicles (AFVs), with the rate of price growth accelerating from 4.9% in June, to 6.2% last month. The average sticker price increased from £21,759 to £22,358 during the same period. Meanwhile the rate of price growth for electric vehicles (EVs) increased at an even more impressive 9.5% year-on-year – with EV sticker prices more than double that of their ICE counterparts at £26,802.
Cars aged five years and more have achieved price growth of 1.2% and an average price of £6,658. While vehicles aged up to five years continue the same negative trend as last month showing a 1.2% price growth. The decline is more notable in cars in the three- to five-year-old category, as price growth declined by 2.1%. This is likely caused by the record new car sales in 2016 and the consequence of an influx of stock in this age bracket entering the market, as consumers renewed finance deals and returned fleet cars.
Karolina Edwards-Smadja, director of commercial products at Auto Trader, said, ‘The price growth of used cars has been on a downward trajectory since the start of the year, this is due to lower consumer confidence and economic uncertainty, especially as we are approaching what could be a no-deal Brexit.
‘It is reassuring, however, that it seems to be a certain age bracket of car which is bringing price growth down rather than a blanket decline across all vehicles. Diesel cars have been impacted as a knock-on effect of diesel-gate and the emissions legislation which has led to confusion among consumers.
‘We’re also experiencing overheating in the market for cars aged three to five years; there’s a great deal of supply but not as much demand for cars in this age bracket, so prices adjust to make them more appealing. And although consumer confidence is low, there is still appetite to buy cars which we can see based on the numbers of searches conducted on Auto Trader.
‘With price growth now in decline it’s never been more important to support the hundreds of thousands of consumers who search for their next car each month to navigate the process as efficiently and simply as possible to increase demand. That way, as demand meets supply prices will re-adjust and we’ll start to see price growth back in the black.’
The percentage of searches by fuel type remains the same, and petrol is still the most popular at 51%, while diesels are 41% and AFVs are 8%. The most searched for used car in July was the VW Golf, followed by BMW 3-Series, Mercedes C-Class, BMW 1-Series and Ford Fiesta.
